The infoshot to help kick-start your week
Coming up this week:
UK GDP data – Thursday
The latest Office for National Statistics (ONS) data on UK GDP will be released on Thursday. The Q2 report is expected to show that the economy expanded at a slightly slower pace of 0.4% compared to 0.6% in Q1. Higher energy costs caused by the conflict in Iran are largely responsible for the slowdown.
US CPI data – Wednesday
Interest rate watchers will have a keen eye on this week’s US inflation data. Pressure on the US Federal Reserve to raise interest rates cooled last week when jobs data showed the US labour market was weakening. The education sector lost 50,000 jobs and retail fell 19,000. If this week’s data shows price growth has accelerated again, expect the Fed to be back under pressure to hike rates soon as they try to navigate an increasingly complex situation around inflation and employment.
Last week:
Best week for tech since April
US markets bounced back last week, with their leading tech index up nearly 5% – its best week since April.
Optimism around the potential reopening of the Strait of Hormuz boosted markets in general. An array of strong quarterly earnings reports bought back some confidence in potential big tech profit growth. The highlight being a 93% quarterly revenue increase at Palantir which saw the stock surge 29.5% at the beginning of the week.
However, not everyone is convinced. Famed Big Short investor, Michael Burry, said on Tuesday that “I continue to believe it is possible we are near a major top, and a 1987 type fall”. 1987’s Black Monday saw the US’s major index fall 20% in one day and caused worldwide losses of an estimated $1.71tn.
SpaceX crashes but lifts off again
Elon Musk’s SpaceX released their first earnings report since their IPO in June. Shares fell 9% Wednesday morning after investors baulked at their capex spending increasing more than six times to $18.3bn. Overall the firm made a loss of $2bn in the first six months of the year. The AI part of the business, where most of the capex is going, made a $1.2bn loss in the quarter.
However, the share price went through a two-day rally following the first post-IPO lock up expiration. Tradeable shares more than doubled but heavy insider selling failed to materialise last week. The rally sent the share price back to just below the initial IPO price for new investors.
Japan markets up, consumption tax cut plan approved
Japanese markets made gains last week following the joint US and Japanese intervention to support the yen. Despite concerns about the country’s strained finances, Prime Minister Sanae Takaichi’s plan to cut consumption tax on food was approved on Wednesday. The tax on food items will be slashed from 8% to 1% from April 2027. It’s the first time the tax has been lowered since it was introduced in 1989. The cut will incur a revenue shortfall of around 5tn yen ($31.7bn).
Notice:
For regulated financial advisers and investment professionals only, Copia does not provide financial advice, and the contents of this document should not be taken as such.
The performance of each asset class is represented by certain Exchange Traded Funds available to UK investors and expressed in GBP terms selected by Copia Capital Management to represent that asset class, as reported at previous Thursday 4:30pm UK close. Reference to a particular asset class does not represent a recommendation to seek exposure to that asset class. This information is included for comparison purposes for the period stated but is not an indicator of potential maximum loss for other periods or in the future.
